3 Stories in the global economy that should not go un-noticed
Some strong economic data fueled concerns that the Federal Reserve will start tapering bond purchases after its September FOMC meeting. Thus, markets ended another week in the negative , pushed lower by mixed economic data and underlying fears about future Fed activity.
For the week, the S&P 500 lost 2.1%, the Dow lost 2.23% and the Nasdaq lost 1.57%.
Here are the 3 stories this week that rose above the noise:
Obama Focuses on Risk of New Bubble Undermining Broad Recovery
In recent weeks, President Obama has emphasized the need to break the boom-and-bust cycle that ultimately led to the dot-com bubble in the late 1990s and the housing market crash that paralyzed the economy as he entered office. Some market prognosticators are cautioning investors that artificial asset price bubbles are currently forming, including in the housing market.
It is true that housing prices are on an unsustainable growth rate (12 percent growth nationally over the previous year), especially in certain markets, including Las Vegas and Phoenix, but home prices are now back to an area that is considered fairly valued by historical standards and remain below the lofty levels reached during the peak in 2006. The acceleration of asset price growth in the housing and stock market should be monitored closely, but it is still premature to conclude that a bubble is forming. At present, housing and stock prices do not appear to be an “imminent risk” a ccording to former Fed official Robert Perli.
Fear of Fed Retreat Roils India
A recent article from The Wall Street Journal details the risks facing emerging markets given that global inte rest rates are on the rise. Many emerging countries have seen their exports deteriorate as global growth has waned, leading these economies to run large current-account deficits, which occur when imports outweigh exports. And, as money has fled out to developed countries, emerging countries face higher borrowing costs to finance the daily spending.
All of Your Egypt Questions Answered
An op-ed from Bloomberg columnist Jeffrey Goldberg sheds light on the conflict in Egypt and U.S. interests in the region. While the United States and its Western allies have supported democracy, the popular election win of Mohammed Morsi and his Muslim Brotherhood was followed by mismanagement an d increasingly anti - western policies. While counter - intuitive, U.S. and Western interests are more closely aligned with the military generals who are attempting to take power from the Muslim Brotherhood.
Articles chosen and summarized by the First Allied Asset Management, Inc. investment management team.
